Tuesday, July 05, 2005

Tested results from eminent domain

You may wish to make a note of the date and time. I am linking to the New York Times' Op-Ed page and I'm recommending everyone read the piece there because I think what's there is useful and extremely well done. Jack Tierney has a great perspective on the use of eminent domain for the purpose of handing property over to other private individuals for tax gain purposes. (Yes, soul-sucking registration required. Use BugMeNot if you'd like.)

:::::::: Pittsburgh has been the great pioneer in eminent domain ever since its leaders razed 80 buildings in the 1950's near the riverfront park downtown. They replaced a bustling business district with Gateway Center, an array of bland corporate towers surrounded by the sort of empty plazas that are now considered hopelessly retrograde by urban planners trying to create street life.

At the time, though, the towers and plazas seemed wonderfully modern. Viewed from across the river, the new skyline was a panoramic advertisement for the Pittsburgh Renaissance, which became a national model and inspired Pittsburgh's leaders to go on finding better uses for private land, especially land occupied by blacks.

Bulldozers razed the Lower Hill District, the black neighborhood next to downtown that was famous for its jazz scene (and now famous mostly as a memory in August Wilson's plays). The city built a domed arena that was supposed to be part of a cultural "acropolis," but the rest of the project died. Today, having belatedly realized that downtown would benefit from people living nearby, the city is trying to entice them back to the Hill by building homes there.

In the 1960's, the bulldozers moved into East Liberty, until then the busiest shopping district outside downtown. Some of the leading businessmen there wanted to upgrade the neighborhood, so hundreds of small businesses and thousands of people were moved to make room for upscale apartment buildings, parking lots, housing projects, roads and a pedestrian mall.

I was working there in a drugstore whose owners cursed the project, and at first I thought they were just behind the times. But their worst fears were confirmed. The shopping district was destroyed. The drugstore closed, along with the department stores, movie theaters, office buildings and most other businesses.

You'd think a fiasco like that would have humbled Pittsburgh's planners, but they just went on. They kicked out a small company to give H. J. Heinz more room. Mayor Tom Murphy has attracted national attention for his grand designs - and fights - to replace thriving small businesses downtown and on the North Side with more upscale tenants.

The city managed to clear out shops and an office building to make room for a new Lazarus department store, built with $50 million in public funds, but Lazarus did not live up to its name. It has shut down and left a vacant building. Meanwhile, the city's finances are in ruins, and businesses and residents have been fleeing the high taxes required to pay off decades of urban renewal projects and corporate subsidies.
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This is where the argument about increased tax revenues justifying the use of eminent domain to transfer property from one private entity to another breaks down. If eminent domain is used to move a neighborhood to put in a highway interchange or a public commuter rail, there's no question that, in the end, the highway interchange or the commuter rail will actually be there and stay there for the foreseeable future. The highway will function as a highway. The benefit of having that highway is exactly what you thought it would be when you built it: people will be able to move more quickly and interchange from one road system to another. The public benefit is there to see and, so long as the road is maintained, will remain so.

Tax revenue from a business depends on that business' success. If the company fails, whether through a fault there at that specific location or due to a wider corporate problem - like the example of Lazarus Department Store that Tierney gives - then the tax revenue drops to zero, which is a long way from an improvement over residential property tax or that generated by a stable smaller business. There's no real way to guarantee that the tax generation benefit will ever emerge, let alone be stable for any period of time. A highway, once built, is a physical edifice that isn't going to pack up and outsource to Cairo.

I would submit that the impossibility of demonstrating a reasonably guaranteed benefit available for the public's use would disqualify such economic uses of eminent domain from being considered a public use. I remain convinced that the Supreme Court screwed the pooch on this one.