Eminent Domain–Another Way Government Can Fail

    Do not think about, write about or deal with  human behavior without determining the effects of incentives.

   The government of New London worked hard to take people’s houses and now the project is abandoned. Good times.

Pfizer to Leave City That Won Land-use Case
Christopher Capozziello for The New York Times

By PATRICK McGEEHAN

City Councilman Robert M. Pero said, “I’m sure that there are people that are waiting out there to say, ‘I told you so.’”

“Look what they did,” Mr. Cristofaro said on Thursday. “They stole our home for economic development. It was all for Pfizer, and now they get up and walk away.”

That sentiment has been echoing around New London since Monday, when Pfizer, the giant drug company, announced it would leave the city just eight years after its arrival led to a debate about urban redevelopment that rumbled through the United States Supreme Court, and reset the boundaries for governments to seize private land for commercial use.

Pfizer said it would pull 1,400 jobs out of New London within two years and move most of them a few miles away to a campus it owns in Groton, Conn., as a cost-cutting measure. It would leave behind the city’s biggest office complex and an adjacent swath of barren land that was cleared of dozens of homes to make room for a hotel, stores and condominiums that were never built.

The announcement stirred up resentment and bitterness among some local residents. They see Pfizer as a corporate carpetbagger that took public money, in the form of big tax breaks, and now wants to run.

“I’m not surprised that they’re gone,” said Susette Kelo, who moved to Groton from New London after the city took her home near Pfizer’s property. “They didn’t get what they wanted: their development, their big plan.”

Ms. Kelo lived in a small pink house in the Fort Trumbull section that was square in the sights of city and state officials who wanted to revitalize the area. The city had created the New London Development Corporation to buy up the nine-acre neighborhood and find a developer to replace it with an “urban village” that would draw shoppers and tourists to the area.

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   Economic planning by politicians–that always works.

Economic development officials in Connecticut used that plan — and a package of financial incentives — to lure Pfizer to build a headquarters for its research division on 26 acres nearby. With an agreement that it would pay just one-fifth of its property taxes for the first 10 years, Pfizer spent $294 million on a 750,000-square-foot complex that opened in 2001.

By then, Ms. Kelo, the Cristofaros and several neighbors had sued the city to stop it from using its power of eminent domain to take their property. The lawsuit, Kelo v. New London, wound up at the Supreme Court in 2005 as one of the most scrutinized property-rights cases in years.

In a 5-to-4 decision, the high court ruled that it was permissible to take private property and turn it over to developers as part of a plan to bolster the local economy. Conservative justices, including Clarence Thomas, dissented. Justice Thomas called New London’s plan “a costly urban-renewal project whose stated purpose is a vague promise of new jobs and increased tax revenue, but which is also suspiciously agreeable to the Pfizer Corporation.”

The decision was widely criticized, and spurred lawmakers across the country to adopt statutes to prevent similar uses of eminent domain. Scott G. Bullock, senior attorney at the Institute for Justice, a libertarian group in Arlington, Va., said that 43 states had moved to protect private-property rights since the Kelo decision. New York and New Jersey are among the seven that have not, he said.

Mr. Bullock, who represented the landowners in New London, said Pfizer’s announcement “really shows the folly of these plans that use massive corporate welfare and abuse eminent domain for private development.”

“They oftentimes fail to live up to expectations,” he added.

For its part, Pfizer said it had no stake in the outcome of the Kelo case nor any interest in the development of the land that was acquired by eminent domain, according to a statement provided by a spokeswoman, Liz Power.

After Pfizer completed its $67 billion acquisition of Wyeth, another drug giant, in October, Ms. Power said, “We had a lot of real estate that we had to make strategic decisions about.” She said Pfizer would try to sell or lease its buildings in New London and would “continue to pay our taxes to the city as scheduled.”

The complex is currently assessed at $220 million, said Robert M. Pero, a city councilman who is scheduled to become mayor next month. The company pays tax on 20 percent of that value and the state pays an additional 40 percent, Mr. Pero said. That arrangement is scheduled to end in 2011, around the time Pfizer, which is currently the city’s biggest taxpayer, expects to complete its withdrawal.

“Basically, our economy lost a thousand jobs, but we still have a building,” Mr. Pero said. Then again, he added, “I don’t know who’s going to be looking for a building like that in this economy.”

Some residents said they expected Pfizer to seek a revaluation of its buildings if they wind up vacant in two years; Ms. Power declined to comment.

Mr. Pero said that he was offended that Pfizer did not notify city officials about the decision before Monday or give them a chance to argue against it or even fully understand it. But he said he did not regret the decisions he and other elected officials had made to bring Pfizer to New London for what they had hoped would be a long and fruitful stay.

“I’m sure that there are people that are waiting out there to say, ‘I told you so,’ ” Mr. Pero said. “I don’t know that even today you can say, ‘I told you so.’ ”

But Mr. Cristofaro and Ms. Kelo both said just that.

Ms. Kelo, a nurse who works in New London and Norwich, Conn., said she was still bitter about the loss of her house, which she sold for $1 to Avner Gregory, a preservationist. Mr. Gregory dismantled the house and moved it across town. It now stands as a bright-pink symbol of the divisive dispute that drew so much attention to New London.

“In all honesty, I’m not happy about what happened to me,” Ms. Kelo said. But, she added, “With 43 states changing their laws, in that sense I feel we did some good for people across the country.”

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     The government uses the law to throw people out of their houses, loses lots of money and creates a wasteland. As they say in government circles, a success.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Days of Songs and Mirrors: A Jacobite in the ‘45.”
Cui Bono–Cherchez les Contingencies

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